In the excitement of making sales and growing a business, it is easy to forget one of the most crucial parts of any business: up to date and accurate accounting. No business owner can afford to be lax about this aspect of their business – even small accounting mistakes can have devastating effects. In the end, small business accounting done wrong has the potential to bring down a business.
Here are three simple but highly useful tips to keep your business accounting running smoothly.
1. Decide between doing it yourself and getting an accountant
Starting out, most business owners assume that they can handle accounting on their own. In some cases, such as business consisting of five or fewer people, this is possible. Accounting software can also eliminate the need for a bookkeeper.
Sometimes however, an accountant with experience can save you a lot of financial trouble. During the first formative years of your company, you may not be that financially savvy or have a lot of time to train. Hiring an accountant means you can focus on your business core, ensuring that it stands a good chance of surviving and growing.
Consider what your goals, needs and current situation are before deciding between an accountant and doing it yourself. For instance, your current budget may only be enough to pay for accounting software or a part time accountant and not the salary of a full time employee.
2. Be strict with payments
Your receivables column may be filling up with cash, but unless that money is in your bank account, it will not do you much good. Clients who delay paying you can severely affect cash flow, a very serious problem for business.
Make sure that you have set down clear terms on when payments should be made. Refuse to provide further services until all balances are settled. For clients who have a habit of delays, consider enacting penalties for late payments.
Put in place measures to help you track all invoices to ensure that you act on any outstanding balances in time.
3. Keep personal and business accounts separate
Your business credit card may have come in handy when you needed to buy that new appliance for your home, but you are risking the health of your business. Things can quickly get complicated when you do not take care to keep personal and business expenses separate. It will also save you a lot of accounting work as you try to make sense of what is happening.
Even if you have an accountant who can easily handle crossover expenses, it is still not worth the risk to mix things up. Have a bank account for your business and another for your personal needs.
A holistic business approach
Accounting is just one part of business that you need to get right for your business to grow. There are also customers, sales and employees to think about. Stephenson Thorner chartered accountants in Wellington provide a holistic solution to business growth. They provide accounting services in Wellington, business advice for start-ups and older businesses and a range of other business solutions.
To enjoy the best accounting practice in Wellington and get the best advice on how to grow your business, contact Stephenson Thorner accountants. Visit their website at www.stephensonthorner.co.nz to get in touch with them.